Preview
1 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
A Limited Liability Partnership
2 Including Professional Corporations
JASON W. KEARNAGHAN, Cal. Bar No. 217498
3 jkearnaghan@sheppardmullin.com
HILARY A. HABIB, Cal. Bar No. 293431
4 hhabib@sheppardmullin.com
333 South Hope Street, 43rd Floor
5 Los Angeles, California 90071-1422
Telephone: 213-620-1780
6 Facsimile: 213-620-1398
7 MELANIE M. HAMILTON, Cal. Bar No. 268037
mhamilton@sheppardmullin.com
8 650 Town Center Drive, 10th Floor E-FILED
Costa Mesa, California 92626-1993 2/11/2021 9:19 AM
9 Telephone: 714-513-5100 Superior Court of California
Facsimile: 714-513-5130 County of Fresno
10 By: I. Herrera, Deputy
Attorneys for Defendants
11 INTEGRATED PRESCRIPTION MANAGEMENT,
INC., WALTER TROY COLLINS, and RICHARD
12 ADAMS
13
SUPERIOR COURT OF THE STATE OF CALIFORNIA
14
FOR THE COUNTY OF FRESNO
15
MICHELLE LITTLEWOOD, Case No. 20CECG03708
16
Plaintiff, Assigned to: Hon. D. Tyler Tharpe
17 Dept.: 501
vs.
18 MEMORANDUM OF POINTS AND
INTEGRATED PRESCRIPTION AUTHORITIES IN SUPPORT OF
19 MANAGEMENT, INC., a Delaware DEFENDANTS INTEGRATED PRESCRIPTION
corporation, COURT SQUARE MANAGEMENT, INC., WALTER TROY
20 CAPITAL PARTNERS, L.P., a Delaware
limited partnership, WALTER TROY COLLINS, AND RICHARD ADAMS’ PETITION
21 COLLINS, an individual, RICHARD TO COMPEL ARBITRATION AND STAY ALL
ADAMS, an individual, and Does 1 CIVIL PROCEEDINGS
22 through 20, inclusive,
[Filed concurrently with Notice of Petition and
23 Defendants. Petition; Declarations of Richard Adams and Hilary
A. Habib; and Proposed Order]
24
Hearing
25 Date: July 20, 2021
Time: 3:30 p.m.
26 Location: Dept. 501
27 Complaint Filed: December 23, 2020
Trial Date: None Set
28
SMRH:4833-8075-4137.4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
DEFENDANTS’ PETITION TO COMPEL ARBITRATION
1 TABLE OF CONTENTS
Page
2
I. INTRODUCTION ..........................................................................................................................6
3
II. STATEMENT OF RELEVANT FACTS ......................................................................................6
4
III. ARGUMENT AND AUTHORITIES ..........................................................................................8
5
A. Federal And California Law Require Enforcement Of The Agreement ....................8
6
B. An Agreement To Arbitrate Exists And Encompasses Plaintiff’s Claims ...............10
7
1. Plaintiff Agreed To Arbitrate Claims Between Her And IPM .................................10
8
2. Individual Defendants Collins And Adams Have Standing To Enforce The
9 Arbitration Agreement .............................................................................................11
10 C. The Agreement Is Not Unconscionable ...................................................................12
11 1. Any Procedural Unconscionability Claim Fails ...........................................13
12 2. The Agreement Is Not Substantively Unconscionable ................................14
13 D. IPM Is Not Required To Sign The Agreement ........................................................15
14 E. All Civil Proceedings In This Court Should Be Stayed ...........................................17
15 IV. CONCLUSION ..........................................................................................................................17
16
17
18
19
20
21
22
23
24
25
26
27
28
-2-
SMRH:4833-8075-4137.4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
DEFENDANTS’ PETITION TO COMPEL ARBITRATION
1 TABLE OF AUTHORITIES
2 Page(s)
Federal Cases
3
Allied-Bruce Terminix Co. v. Dobson
4
513 U.S. 265 (1995) .....................................................................................................................8
5
Amisil Holdings Ltd. v. Clarium Capital Mgmt. LLC
6 622 F. Supp. 2d 825 (2007) ........................................................................................................12
7 AT&T Mobility v. Concepcion
131 S.Ct. 1740 (2011) ............................................................................................................9, 13
8
Chavez v. Bank of Am.
9
2011 U.S. Dist. LEXIS 116630 (N.D. Cal. Oct. 7, 2011) ..........................................................11
10
Circuit City Stores, Inc. v. Adams
11 532 U.S. 105 (2001) ...............................................................................................................8, 16
12 Comedy Club, Inc. v. Improv W. Assocs.
553 F.3d 1277 (9th Cir. 2009) cert. denied, 130 S.Ct. 145 (2009) ............................................11
13
Comer v. Micor, Inc.
14 436 F. 3d 1098 (9th Cir. 2006) ...................................................................................................11
15
Dean Witter Reynolds, Inc. v. Byrd
16 470 U.S. 213 (1985) .....................................................................................................................9
17 EEOC v. Waffle House, Inc.
534 U.S. 279 (2002) .....................................................................................................................8
18
Epic Systems Corp. v. Lewis
19 138 S.Ct. 1612 (2018) ................................................................................................................13
20 Gerton v. Fortiss, LLC
21 2016 U.S. Dist. LEXIS 19297 (N.D. Cal. Feb. 16, 2016) ..........................................................11
22 Gilmer v. Interstate/Johnson Lane Corporation
500 U.S. 20 (1991) .....................................................................................................................16
23
Murphy v. DirecTV, Inc.
24 724 F.3d 1218 (2013) .................................................................................................................12
25 Perry v. Thomas
482 U.S. 483 (1997) .....................................................................................................................9
26
27
28
-3-
SMRH:4833-8075-4137.4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
DEFENDANTS’ PETITION TO COMPEL ARBITRATION
1 State Cases
2 Armendariz v. Foundation Health Psychcare Servs., Inc.
24 Cal. 4th 83 (2000)..........................................................................................10, 12, 13, 14, 15
3
Baltazar v. Forever 21, Inc.
4
62 Cal. 4th 1237 (2015)........................................................................................................13, 14
5
Boucher v. Alliance Title Co., Inc.
6 127 Cal. App. 4th 262 (2005) .....................................................................................................12
7 Cronus Investments, Inc. v. Concierge Services
35 Cal. 4th 376 (2005)..................................................................................................................8
8
Davis v. Jacoby
9
1 Cal. 2d 370 (1934) ...................................................................................................................16
10
Diaz v. Sohnen Enterprises, et al.
11 34 Cal. App. 5th 126 (2019) .......................................................................................................17
12 Dryer v. Los Angeles Rams
40 Cal. 3d 406 (1985) .................................................................................................................11
13
E.O.C. Ord, Inc. v. Kovakovich
14 200 Cal. App. 3d 1194 (1988) ....................................................................................................16
15
Eastern Aviation Croup, Inc. v. Airborne Express, Inc.
16 6 Cal. App. 4th 1448 (1992) .......................................................................................................11
17 Frame v. Merrill Lynch, Pierce, Fenner & Smith, Inc.
20 Cal. App. 3d 668 (1971) ........................................................................................................16
18
Garcia v. Pexco, LLC
19 11 Cal. App. 5th 782 (2017) .......................................................................................................12
20 Goldman v. KPMG, LLP
21 173 Cal. App. 4th 209 (2009) .....................................................................................................12
22 Harris v. TAP Worldwide, LLC
248 Cal. App. 4th 373 (2016) .....................................................................................................17
23
Iskanian v. CLS Transp. Los Angeles, LLC
24 59 Cal. 4th 348 (2014)................................................................................................................14
25 Marenco v. DirecTV LLC
233 Cal. App. 4th 1409 (2015) .............................................................................................10, 13
26
27 Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC
55 Cal. 4th 223 (2012)................................................................................................................17
28
-4-
SMRH:4833-8075-4137.4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
DEFENDANTS’ PETITION TO COMPEL ARBITRATION
1 Robison v. City of Manteca
78 Cal. App. 4th 452 (2000) .......................................................................................................13
2
Rodriguez v. American Technologies, Inc.
3 136 Cal. App. 4th 1110 (2006) .....................................................................................................8
4
Samura v. Kaiser Foundation Health Plan, Inc.
5 17 Cal. App. 4th 1284 (1993) .....................................................................................................13
6 Shepard v. Edward MacKay Enters., Inc.
148 Cal. App. 4th 1092 (2007) .....................................................................................................9
7
Thomas v. Westlake
8 204 Cal. App. 4th 605 (2012) .....................................................................................................12
9
Turtle Ridge Media Group, Inc. v. Pacific Bell Directory
10 140 Cal. App. 4th 828 (2006) .....................................................................................................12
11 Federal: Statutes, Rules, Regulations, Constitutional Provisions
12 9 U.S.C. § 1 ....................................................................................................................................7, 8
13 9 U.S.C. § 2 ....................................................................................................................................8, 9
14 9 U.S.C. § 4 ......................................................................................................................................11
15 Fair Employment and Housing Act ........................................................................................6, 10, 11
16
U.S. Constitution ................................................................................................................................8
17
State: Statutes, Rules, Regulations, Constitutional Provisions
18
C.C.P. § 1281.2 ..........................................................................................................................10, 11
19
C.C.P. § 1281.4 ................................................................................................................................17
20
Labor Code § 230.8 ............................................................................................................................6
21
Labor Code § 1102.5 ..........................................................................................................................6
22
23
24
25
26
27
28
-5-
SMRH:4833-8075-4137.4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
DEFENDANTS’ PETITION TO COMPEL ARBITRATION
1 I. INTRODUCTION
2 Plaintiff Michelle Littlewood (“Plaintiff”) signed a valid and enforceable arbitration
3 agreement whereby she agreed that all disputes involving any and all “events occurring between
4 [Integrated Prescription Management, Inc.] and [her], including the termination of the employment
5 relationship” are subject to arbitration. Plaintiff was acutely aware of the arbitration agreement that
6 she signed, because as the Chief Talent Officer of Defendant Integrated Prescription Management,
7 Inc. (“IPM”), and a former Human Resources consultant to IPM, she was responsible for reviewing
8 and approving the arbitration agreement with which she now takes issue.
9 Despite the existence of the above agreement, Plaintiff filed a civil action asserting the
10 following fourteen causes of action: (1) harassment and discrimination based on gender/sex in
11 violation of the Fair Employment and Housing Act (“FEHA”); (2) retaliation in violation of the
12 FEHA; (3) discrimination based on association with a disabled person in violation of the FEHA; (4)
13 failure to accommodate disability in violation of the FEHA; (5) failure to engage in the interactive
14 process in violation of the FEHA; (6) retaliation for exercising rights under the California Family
15 Rights Act (“CFRA”); (7) whistleblower retaliation (Labor Code § 1102.5); (8) retaliation (Labor
16 Code § 230.8); (9) wrongful discharge in violation of public policy; (10) defamation; (11) breach of
17 the implied covenant not to terminate except for good cause; (12) breach of the implied covenant of
18 good faith and fair dealing; (13) intentional interference with contractual relationship; and (14)
19 interference with economic relationship. In light of Plaintiff’s arbitration agreement, this petition to
20 compel arbitration and stay all civil proceedings should be granted.1
21 II. STATEMENT OF RELEVANT FACTS
22 IPM is a pharmacy benefits management company based in Fresno, California. (Declaration
23 of Richard Adams (“Adams Decl.”), ¶ 2.) In 2015, Plaintiff co-founded CoreHR Team, a Human
24 Resources consulting firm. (Complaint, ¶ 14.) In 2018, CoreHR Team and IPM entered into a
25 contract for services, through which CoreHR Team was responsible for handling IPM’s human
26
1
Plaintiff also names as a defendant Court Square Capital Partners, L.P. (“Court Square”) on the
27 theory that it was a joint employer of Plaintiff. It is Defendants’ understanding that Court Square
will be filing a joinder or a petition seeking to compel arbitration of the claims asserted against it.
28
-6-
SMRH:4833-8075-4137.4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
DEFENDANTS’ PETITION TO COMPEL ARBITRATION
1 resources functions, such as ensuring IPM’s compliance with state and federal laws and onboarding
2 new employees. (Adams Decl., ¶ 3, Ex. A.) In January 2020, Plaintiff was hired as IPM’s Chief
3 Talent Officer in Fresno. (Id. at ¶ 4.) In this position, Plaintiff served as the head of Human
4 Resources and was personally responsible for reviewing and approving IPM’s arbitration
5 agreement, as well as signing each agreement on IPM’s behalf. (Id. at ¶ 6.) At the beginning of her
6 employment, Plaintiff signed the arbitration agreement (titled “Alternative Dispute Resolution,” and
7 referred to herein as the “Agreement”) containing the following provisions:
8 This Agreement serves as the exclusive remedy for any dispute arising out of the
employment relationship between the Company and you, except for those claims
9 specifically excluded by this agreement or prohibited by law. All such disputes
shall be submitted to arbitration pursuant to the provisions of the Federal
10 Arbitration Act (9 U.S.C. Section 1 and following), if applicable.
11 Disputes covered by this Agreement shall include all events occurring between
the Company and you, including the termination of the employment relationship.
12 By agreeing to arbitrate these disputes, you and the Company are waiving the
right to a jury trial on those claims permitted by law to be arbitrated.
13
The Company and you agree that this Agreement shall apply whether the dispute
14 involves a cause of action in contract, in tort, or based on any other legal theory or
statute, including but not limited to the California Fair Employment and Housing
15 Act, the Family Medical Leave Act, the California Family Rights Act . . . or any
other federal, state or local act or statute lawfully subject to arbitration.
16
Both the Company and you will participate in selecting the arbitrator. The
17 arbitrator shall be able to award any remedy normally available through a civil
proceeding.
18
You and the Company shall be entitled to discovery sufficient to adequately
19 arbitrate the claim[.]
20 The arbitrator shall issue a written decision that will provide the essential
findings, facts, law, and conclusions on which any award is based.
21
[T]he employee will not be responsible for any costs not normally incurred during
22 litigation. The Company shall be responsible for the cost of the arbitration . . .
including arbitration fees.
23
24 (Id. at ¶ 5, Ex. B.) IPM is the “Company” referenced in the Agreement. (Id.) Thus, Plaintiff
25 expressly agreed to arbitrate with IPM.
26 On January 8, 2021, Defendants sent a letter to Plaintiff requesting that she stipulate to
27 arbitration in accordance with the Agreement. (Declaration of Hilary A. Habib (“Habib Decl.”), ¶
28 2, Ex. 1.) On January 10, 2021, Plaintiff advised that she would not stipulate to arbitration. (Id.)
-7-
SMRH:4833-8075-4137.4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
DEFENDANTS’ PETITION TO COMPEL ARBITRATION
1 III. ARGUMENT AND AUTHORITIES
2 A. Federal And California Law Require Enforcement Of The Agreement
3 The Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. (“FAA”), applies when the parties’
4 arbitration agreement specifies that it applies. Rodriguez v. American Technologies, Inc., 136 Cal.
5 App. 4th 1110, 1121-22 (2006) (requiring the parties to arbitrate in accordance with the FAA when
6 they agreed to arbitrate their claims “[p]ursuant to the Federal Arbitration Act”); see also Cronus
7 Investments, Inc. v. Concierge Services, 35 Cal. 4th 376, 383 (2005) (“we examine the language of
8 the contract to determine whether the parties intended to apply the FAA to the exclusion of
9 California procedural law”).) Here, the Agreement states: “This Agreement serves as the exclusive
10 remedy for any dispute arising out of the employment relationship between the Company and you,
11 except for those claims specifically excluded by this agreement or prohibited by law. All such
12 disputes shall be subject to arbitration pursuant to the provisions of the Federal Arbitration Act (9
13 U.S.C. Section 1 and following), if applicable[.]” (Adams Decl., ¶ 5, Ex. B.) Here, the FAA
14 applies.
15 The FAA governs any arbitration agreement which “evidenc[es] a transaction involving
16 commerce.” 9 U.S.C. § 2. The phrase “involving commerce” extends the reach of the FAA to the
17 full extent of Congress’ power to regulate under the Commerce Clause of the U.S. Constitution.
18 Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265 (1995). In Circuit City Stores, Inc. v. Adams,
19 the U.S. Supreme Court held the phrase “involving commerce” must be read expansively and
20 incorporates contracts of employment, except for those involving the “employment of
21 transportation workers.” 532 U.S. 105, 119 (2001); EEOC v. Waffle House, Inc., 534 U.S. 279,
22 289 (2002) (“Employment contracts, except for those covering workers engaged in transportation,
23 are covered by the [FAA].”).
24 As noted, Plaintiff was employed as a Chief Talent Officer, not a transportation worker.
25 (Adams Decl., ¶ 6.) Further, the Agreement involves an employment relationship with a significant
26 relation to interstate commerce. IPM provides services to both California and non-California
27 residents and regularly provides its services to companies throughout the United States. (Id. at ¶
28 7.) Standing alone, this evidence satisfies the interstate commerce requirement. See Shepard v.
-8-
SMRH:4833-8075-4137.4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
DEFENDANTS’ PETITION TO COMPEL ARBITRATION
1 Edward MacKay Enters., Inc., 148 Cal. App. 4th 1092, 1101 (2007) (because “the construction of
2 plaintiff’s house involved the receipt and use of building materials that were manufactured and/or
3 produced outside California,” the FAA applied to parties’ arbitration agreement). As such, the
4 Agreement is governed by the FAA.
5 Under the FAA, a court must order arbitration if the parties have entered into an agreement
6 to arbitrate the dispute. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (“the [FAA]
7 leaves no place for the exercise of discretion by a district court, but instead mandates that district
8 courts shall direct the parties to proceed to arbitration on issues as to which an arbitration
9 agreement has been signed”) (emphasis in original). As the Supreme Court explained:
10 [O]ur cases place it beyond dispute that the FAA was designed to promote
arbitration. They have repeatedly described the Act as “embody[ing] [a] national
11 policy favoring arbitration” ... and “a liberal federal policy favoring arbitration
agreements, notwithstanding any state substantive or procedural policies to the
12 contrary.”
13 AT&T Mobility v. Concepcion, 131 S.Ct. 1740, 1749 (2011). The Supreme Court has additionally
14 confirmed that the “overarching purpose of the FAA... is to ensure the enforcement of arbitration
15 agreements according to their terms so as to facilitate streamlined proceedings.” Id. at 1748.
16 Indeed:
17 [I]n enacting § 2 of the [FAA], Congress declared a national policy favoring
arbitration and withdrew the power of the states to require a judicial forum for the
18 resolution of claims which the contracting parties agreed to resolve by
arbitration.” “Congress intended to foreclose state legislative attempts to
19 undercut the enforceability of arbitration agreements.” Section 2, therefore,
embodies a clear federal policy of requiring arbitration unless the agreement to
20 arbitrate is not part of a contract evidencing interstate commerce or is revocable
“upon such grounds as exist at law or in equity for the revocation of any
21 contract.” 9 U.S.C. § 2 “We see nothing in the [FAA] indicating that the broad
principle of enforceability is subject to any additional limitations under state law.”
22
23 Perry v. Thomas, 482 U.S. 483, 489-90 (1997) (most internal citations omitted). Thus, under the
24 FAA, a court must enforce an arbitration agreement when it applies to the dispute in question.
25 Likewise, the California Arbitration Act (“CAA”), which is enforceable insofar as it is not
26 more restrictive than the FAA, provides a comprehensive scheme for enforcing arbitration
27 agreements. Armendariz v. Foundation Health Psychcare Servs., Inc., 24 Cal. 4th 83, 98 (2000).
28 The CAA provides:
-9-
SMRH:4833-8075-4137.4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
DEFENDANTS’ PETITION TO COMPEL ARBITRATION
1 On petition of a party to an arbitration agreement alleging the existence of a
written agreement to arbitrate a controversy and that a party thereto refuses to
2 arbitrate such controversy, the court shall order the petitioner and the respondent
to arbitrate the controversy if it determines that an agreement to arbitrate the
3 controversy exists….
4 C.C.P. § 1281.2. Therefore, under California law, a court must also compel arbitration where an
5 arbitration agreement exists.
6 B. An Agreement To Arbitrate Exists And Encompasses Plaintiff’s Claims
7 “The party seeking arbitration bears the burden of proving the existence of an arbitration
8 agreement, and the party opposing arbitration bears the burden of proving any defense, such as
9 unconscionability.” Marenco v. DirecTV LLC, 233 Cal. App. 4th 1409, 1416 (2015) (citations
10 omitted).
11 1. Plaintiff Agreed To Arbitrate Claims Between Her And IPM
12 Here, an agreement to arbitrate exists and plainly applies to the disputes in question.
13 Plaintiff agreed that:
14 This Agreement serves as the exclusive remedy for any dispute arising out of the
employment relationship between the Company and you, except for those claims
15 specifically excluded by this agreement or prohibited by law . . . Disputes covered by this
Agreement shall include all events occurring between the Company and you, including the
16 termination of the employment relationship. By agreeing to arbitrate these disputes, you
and the Company are waiving the right to a jury trial on those claims permitted by law to
17 be arbitrated.
18 (Adams Decl., ¶ 5, Ex. B.) Plaintiff has sued IPM (the “Company” indicated in the Agreement)
19 regarding disputes arising out of her employment relationship with IPM.2 Thus, the Agreement
20 must be enforced.
21 Further, each cause of action asserted by Plaintiff “arises from” her employment. Five
22 claims are based on alleged violations of the FEHA, one claim is based on alleged violations of the
23 CFRA, two claims are based on alleged Labor Code violations, five other claims are expressly
24 based on Plaintiff’s termination, and the remaining claim (defamation) is based on the same set of
25 facts and allegations that underlie her FEHA and Labor Code claims and arise from her
26
2
27 Plaintiff has also sued individual defendants Walter Troy Collins and Richard Adams. The
Agreement applies to her claims against them as discussed in Section III(B)(2).
28
-10-
SMRH:4833-8075-4137.4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
DEFENDANTS’ PETITION TO COMPEL ARBITRATION
1 employment at IPM. See Complaint, generally. As such, these claims clearly relate to Plaintiff’s
2 employment.
3 Accordingly, it is beyond dispute that the Agreement applies to the claims at issue. As
4 noted, where there exists a valid agreement to arbitrate and the dispute falls within the scope of the
5 agreement, the Court must order the parties to arbitrate in accordance with the terms of their
6 agreement. See 9 U.S.C. § 4 C.C.P. § 1281.2. As such, Defendants request that the Court order
7 Plaintiff to arbitration.
8 2. Individual Defendants Collins And Adams Have Standing To Enforce The
9 Arbitration Agreement
10 Individual defendants Collins and Adams have standing, as non-signatory third party
11 beneficiaries to the Agreement, to compel Plaintiff to arbitrate her claims. A contract may bind
12 non-parties, such as an intended third party beneficiary. Comedy Club, Inc. v. Improv W. Assocs.,
13 553 F.3d 1277, 1287 (9th Cir. 2009) cert. denied, 130 S.Ct. 145 (2009); Chavez v. Bank of Am.,
14 2011 U.S. Dist. LEXIS 116630, at *14 (N.D. Cal. Oct. 7, 2011). This principle applies to
15 arbitration clauses. Id.; see Comer v. Micor, Inc., 436 F. 3d 1098, 1101 (9th Cir. 2006)
16 (“[N]onsignatories can enforce arbitration agreements as third party beneficiaries.”). “[A] litigant
17 who is not a party to an arbitration agreement may invoke arbitration if the relevant state contract
18 law allows the litigant to enforce the agreement.” Gerton v. Fortiss, LLC, 2016 U.S. Dist. LEXIS
19 19297, at *21 (N.D. Cal. Feb. 16, 2016).
20 Indeed, California law permits a nonsignatory beneficiary of an arbitration agreement to
21 compel arbitration. See Dryer v. Los Angeles Rams, 40 Cal. 3d 406, 418 (1985). “Whether the
22 third party is an intended beneficiary or merely an incidental beneficiary involves construction of
23 the intention of the parties, gathered from reading the contract as a whole in light of the
24 circumstances under which it was entered.” Eastern Aviation Croup, Inc. v. Airborne Express,
25 Inc., 6 Cal. App. 4th 1448, 1452 (1992).
26 Here, Plaintiff expressly agreed to arbitrate disputes regarding “all events occurring
27 between the Company and [her], including the termination of the employment relationship.”
28 (Adams Decl., ¶ 5, Ex. B.) Furthermore, Plaintiff’s Complaint specifically alleges that Collins and
-11-
SMRH:4833-8075-4137.4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
DEFENDANTS’ PETITION TO COMPEL ARBITRATION
1 Adams were acting as managing agents of IPM. (See Complaint ¶¶ 4-6.) Thus, it is evident that
2 Collins and Adams are intended third party beneficiaries, and Plaintiff’s claims against them are
3 subject to binding arbitration.
4 Alternatively, a nonsignatory party has standing to enforce an arbitration agreement on
5 equitable estoppel grounds. Amisil Holdings Ltd. v. Clarium Capital Mgmt. LLC, 622 F. Supp.
6 2d 825, 840 (2007); Boucher v. Alliance Title Co., Inc., 127 Cal. App. 4th 262, 268 (2005);
7 Goldman v. KPMG, LLP, 173 Cal. App. 4th 209, 220 (2009). A nonsignatory defendant may
8 invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the
9 signatory’s claims are based upon and intertwined with a contract containing an arbitration
10 agreement. Turtle Ridge Media Group, Inc. v. Pacific Bell Directory, 140 Cal. App. 4th 828, 833
11 (2006); Murphy v. DirecTV, Inc., 724 F.3d 1218, 1230 (2013); see Thomas v. Westlake, 204 Cal.
12 App. 4th 605 (2012) (“By the allegations of [plaintiff’s] own complaint, the individual defendants
13 were at all times acting on behalf of [the employer defendant] in the course and scope of their
14 employment. Under such circumstances they are entitled to invoke the arbitration requirement.”);
15 Garcia v. Pexco, LLC, 11 Cal. App. 5th 782 (2017).
16 Here, Plaintiff’s allegations against Collins and Adams are based upon and intertwined
17 with Plaintiff’s employment-related claims against IPM, as Plaintiff is suing Collins and Adams
18 over the same facts and conduct that are subject to the Agreement. Accordingly, Collins and
19 Adams can invoke the Agreement to compel Plaintiff to arbitrate her claims against them.
20 C. The Agreement Is Not Unconscionable
21 Plaintiff may argue that the Agreement is unconscionable. “[I]n order for a court to exercise
22 its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability” the
23 agreement must be both procedurally and substantively unconscionable. Armendariz, 24 Cal. 4th at
24 114. This assessment is made on a “sliding scale;” thus, the less procedurally unconscionable the
25 term, the more evidence of substantive unconscionability is required to find an agreement
26 unenforceable. Id.
27 As the California Supreme Court held when reviewing an arbitration agreement in the
28 employment context, unconscionability should not be lightly found. “[U]nconscionability requires
-12-
SMRH:4833-8075-4137.4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
DEFENDANTS’ PETITION TO COMPEL ARBITRATION
1 a substantial degree of unfairness beyond a simple old-fashioned bad bargain. This latter
2 qualification is important. Commerce depends on the enforceability, in most instances, of a duly
3 executed written contract. A party cannot avoid a contractual obligation merely by complaining
4 that the deal, in retrospect, was unfair or a bad bargain. Not all one-sided contract provisions are
5 unconscionable….” Baltazar v. Forever 21, Inc., 62 Cal. 4th 1237, 1245 (2015) (citations omitted,
6 emphasis in original). As noted, Plaintiff bears the burden of establishing unconscionability.
7 Marenco, 233 Cal. App. 4th at 1416. Plaintiff cannot do so here.
8 1. Any Procedural Unconscionability Claim Fails
9 To establish procedural unconscionability, a party must demonstrate both unequal
10 bargaining power and a failure to disclose material contract provisions; that is, an element of
11 “unfair surprise.” See, e.g., Samura v. Kaiser Foundation Health Plan, Inc., 17 Cal. App. 4th 1284,
12 1296 (1993); Robison v. City of Manteca, 78 Cal. App. 4th 452, 458-59 (2000). As an initial
13 matter, as a Human Resources consultant to IPM through CoreHR Team, and then IPM’s Chief
14 Talent Officer, Plaintiff was responsible for reviewing and ultimately approving the arbitration
15 agreement she now takes issue with. (Adams Decl., ¶¶ 2, 6.) Therefore, she cannot legitimately
16 claim that she was somehow unaware of or surprised by the arbitration provision to which she
17 consented.
18 Further, to the extent Plaintiff claims that the Agreement was presented as a mandatory
19 condition of employment, both the California and United States Supreme Courts have held that the
20 mere fact that an agreement to arbitrate was presented in a contract of adhesion does not make the
21 agreement unconscionable. See Concepcion, 131 S.Ct. at 1750 (affirming enforceability of a
22 mandatory arbitration agreement contained within a sale agreement); Epic Systems Corp. v. Lewis,
23 138 S.Ct. 1612, 1619 (2018) (upholding arbitration agreement with class action waiver imposed by
24 employer as a condition of employment); Armendariz, 24 Cal. 4th at 90 (holding that “[m]andatory
25 employment arbitration agreements . . . which an employer imposes on a prospective or current
26 employee as a condition of employment . . . are in fact arbitrable”); Iskanian v. CLS Transp. Los
27 Angeles, LLC, 59 Cal. 4th 348 (2014) (upholding enforceability of arbitration agreement with class
28 action waiver imposed as a condition of employment).